Taiwanese footwear maker takes on Prada, LVMH

Bloomberg

Tue, Jul 16, 2013 - Page 15

Stella International Holdings (九興控股), the Asian shoemaker that manufactures for companies such as Prada SpA, plans to expand its own brands in Paris, turning into a lower-priced competitor to luxury clients there.

The contract manufacturer plans to add two shops in Paris by the end of this year and expand into other locations in Europe, Stephen Chi (齊樂人), chief executive of the company’s women’s footwear and retail business division, said in a telephone interview on Wednesday last week. The company, which was founded in Taiwan and trades on the Hong Kong stock exchange, already has one Paris store.

In the world’s fashion capital, Stella faces larger and better-known labels, including Prada and LVMH Moet Hennessy Louis Vuitton SA. Both companies’ brands are clients of Stella’s contract manufacturing business, according to its Web site. Western brands have rushed into the Chinese market to grab a slice of the country’s luxury market to tap rising incomes. Stella, which had about 400 stores in China as of March, would be bucking that trend to expand in the opposite direction.

“We want to be an international brand,” Chi said. “We want to build a global platform and bring affordable luxury for women around the world.”

Its first European store in Paris specializes in women’s shoes priced between 250 euros to 600 euros (US$330 to US$785), about a third the cost of a pair of Prada pumps.

Established in 1982, Stella has been making shoes for luxury brands such as LVMH’s Givenchy. The footwear maker does not aim to compete with luxury clients like Givenchy, Chi said.

After years of manufacturing for luxury brands, it wants to leverage the experience to design and produce shoes under its own brands, he said.

“We are not Prada, Givenchy or Miu Miu,” he said. “We just want to be the best brand possible in terms of quality and price.”

Stella also manufactures for casual footwear companies such as Clarks, ECCO, Rockport and Timberland. Manufacturing accounted for the bulk of its business, or about 92 percent of its US$1.55 billion total revenue last year.

The company expects its retail business to account for 20 percent of total revenue in five years, as it opens more shops and expands into other categories such as handbags and accessories. It also expects the retail business to keep growing in “double digits” for this year, Chi said.

The shoemaker in 2006 started selling its self-developed “Stella Luna” and “What For” brands in China, and recently introduced the “JKJY” brand. Retail revenue gained 21 percent to US$119.4 million last year and its contribution to the company’s total revenue rose to 7.7 percent from 6.6 percent a year earlier.

Parisians are very demanding on quality and design, said Chi, who is also the firm’s chief designer.

“If we can be successful in Paris, we’ll have a much easier task anywhere else.”